Analysts covering One 97 Communications, the parent company of payment platform Paytm, have revised their outlook on the stock over the next 12 months following Paytm’s announcement of scaling back small-ticket loans and recalibrating its buy now, pay later (BNPL) business.

What Happened: During a recent analyst call, Paytm highlighted a shift in focus towards higher-ticket size loans (₹3 lakh to ₹7 lakh), low-risk personal loans and merchant loans, while indicating a reduction in loans below ₹50,000.

Analyst Calls: Goldman Sachs downgraded Paytm from “buy” to “neutral” and significantly reduced its price target from ₹1,250 to ₹840. This move aligns with Goldman Sachs’ lowered projections for Paytm’s net income turning positive in fiscal year 2026, compared to the earlier estimate of fiscal year 2025. The firm also adjusted revenue and EBITDA estimates for the fiscal years 2024 to 2026 by 10% and 40%, respectively, based on a substantial cut in lending estimates.

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Jefferies, while maintaining a “buy” recommendation, slashed its price target for Paytm from ₹1,300 to ₹1,050. The brokerage acknowledged Paytm’s plans to recalibrate its BNPL business amid changes in lending partnerships post measures announced by the Reserve Bank of India. Jefferies predicted a reduction in BNPL disbursals, accounting for 55% of overall loans, in the next three to four months, with a focus on scaling up high-ticket personal and merchant loans.

Bernstein expressed concerns over Paytm’s decision to scale back small-ticket loans and recalibrate BNPL, considering postpaid products as a crucial element of its business model. While maintaining an outperform stance, Bernstein reduced its price target from ₹1,100 to ₹950, highlighting the potential long-term impact on earnings per share due to slower disbursal growth.

Morgan Stanley, maintaining an “equal-weight” rating, noted a near-term drop in Paytm’s disbursement run-rate but expected limited earnings impact as higher-ticket loans and other financial businesses scale up. The brokerage retained a price target of ₹830.

Price Action: Paytm’s share price crashed 20% at the start of trade on Thursday to hit the lower circuit, extending losses from the previous session.

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